All Forum Posts by: JD Martin

I have several "day jobs", so I agree wholeheartedly. From a selfish standpoint it works out well for me if people do this because they have less ability to compete with me for houses, but from a moral perspective I would not tell anyone to do this unless their cash flow was very close to the job, they had diversification, and no or little debt.

I like this approach to W/D! I don't supply these, as I rent SFH and tenants always seem to have their own. I have only had one tenant show up with a fridge, and that was because she was recently divorced. All others have needed fridges. I supply stove and dishwasher as well. If a tenant comes with their own fridge, I will store the one that is there. I hate having tenants moving washers and dryers in and out, and doing hook ups, so I may try this approach next time!

I'm not sure if you're being a contrarian or just enjoy the banter, so I'm going to bow out of this discussion. You personally are doing exactly what you are arguing against, which makes no sense, and it's not because you got started in your 40s. The amount of interest paid (or PMI, which generally doesn't apply because banks are not going to lend you more than 80% LTV anyway) doesn't make an ounce of difference so long as the property cash flows, strictly financially speaking. Every time you post an example you leave out the income portion of the equation and only speak of costs. Investors far, far smarter than you and I put together understand this - the biggest investors in the world almost always use leverage to compound their earnings abilities. I deal with major housing subdivision developers that create 9 figure upscale developments in my "day" job, and guess what? None of them "saved up their money" to build the development. No, they leveraged the bank's money into the development. Is there some risk? Of course, just as there would be some risk if they "saved up their money" and plowed it into a development. By using leverage, they often have 3-5 developments or more going all the time, and if one gets soft the other 4 are still plugging along. Contrary to popular belief, all the developers didn't go under in the last recession - only the ones who didn't understand the proper way to use leverage. 95% leverage and razor-thin margins usually don't work, but 75% leverage and healthy cash flow works just fine - but you know this, because you are leveraged 75%. You should be saving up your money, because in 20 years you'd have 3 or 4 cash free properties, right?

If you don't understand this, then I'm sorry, but you don't understand leverage or the power of multiplication. More power to you, and I hope you use the leverage that you don't understand to make you more money than would be possible leaving your capital idle.  

 I'm not going to bother with the numbers, only to point out that everything you posted about Buyer A is true for Buyer B but multiplied by a factor of however many units he/she has minus the incremental cost of the leverage. There is simply no way, for most people, that they have enough years to work another job and save enough cash to have this method of building wealth make sense. Even you realize this, unless you just like carrying notes of 75% of the cost of your units. The "DR" strategy - and it's not even his strategy, just his profit center - only works given enough years or enough outside income earned to save enough cash to purchase enough units to make this strategy work. Time is not your friend with this method; time is your enemy.

Also, to address another of Guru Dave's Commandments, "Thou shalt encumber debt only to purchase thy primary residence". If debt is truly the enemy, then purchasing a house to live in with debt is the ultimate folly. From a financially rational point of view, the best debt would be that which produces the greatest amount of income, while the worst debt would be that which absorbs the greatest amount of income. For example, college student loan debt that allows one to earn 5X more money is smarter than buying a Porsche, financially speaking. Given that, purchasing an investment property with debt that produces healthy rental income and living in a travel trailer in your parent's driveway is smarter than purchasing a nice little ranch to live in, financially speaking. And many people realize this - they will buy a duplex or apartment building and live in the crappy basement while renting out the nicer apartments above. 

Whether to play Devil's Advocate, or out of genuine misunderstanding, you are confusing level of comfort with a rational financial decision. Equity sitting idle might make you sleep better at night, and that is worth something, but that is still not the best use of that money, financially speaking. I don't discount the value of having some properties free and clear, or having strong positions in property, both of which I personally have, but that is more a function of personal comfort than rational decisiveness when it comes to finance. 

I love Google Voice. We have it set up so that we can screen all calls and there is an "attendant" on duty at all times. And I can read the phone message, see what property they are calling about, and hit them with a direct link to call them back on my smart phone. And I was able to select a phone number that was relatively easy to remember for the business. 

Did I say I love Google Voice? 

 ^^ Exactly. I know it can be hard to do when you feel an "emotional" connection to a house, especially after your sweat equity went into making it nice. You have to get past that. You are providing a commodity to another human being who will have different tastes (hence the reason most LLs paint houses in neutral colors). They will also not live like you, clean like you, treasure the little wall niche like you. I have nice rentals, and I see things all the time that make me think "Why can't they just ____ (fill in the blank)?" Then I remember the automatic payment that showed up in my bank account, and I smile, and appreciate that as long as that payment is on time, and they are not permanently damaging the house, creating a nuisance, or creating legal liabilities for me, I really don't care if they are messy, neat, conservative, liberal, religious, satanic, gay, straight, mixed, artistically challenged, or anything else. 

2 or 3. 1 is awful. 2 is simple and clean if you need the logo for computer graphics, business cards, etc. 

Other suggestions:

1. Buy the house.

2. Put up some serious screening - why can you even see this house? 

3. Sue them 

Outside of those things, and filing complaints when they are truly breaking the law (i.e. breaking decibel ordinances), you don't get to pick the neighbors. Did they wait to play metal music and put up the rebel flags until after you bought the place? That's pretty sneaky...unless, of course, since they've been there for 6 years any one of a number of neighbors could have told you about them. 

If it were my house, I'd make them disappear with fencing, planting, or a combination of the two. 

You need the services of an attorney, not advice here. You should have let him go as soon as he wouldn't work 9-5.